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Modicare: Here's why implementation is a huge challenge

The first hurdle is in getting the state Cabinets to approve the AB-NHPM. But that's the least of the problems. With BJP/NDA combine ruling 21 of India's 29 states, at least those states should approve it sooner than later. Others are uncertain.

By Rajeev Dubey

Thursday, March 22, 2018

Centrally sponsored Ayushman Bharat - National Health Protection Mission (AB-NHPM) has been approved by the Cabinet but it faces enormous implementation and infrastructural hurdles even before it gets off the ground.

The first hurdle is in getting the state Cabinets to approve the AB-NHPM. But that's the least of the problems. With BJP/NDA combine ruling 21 of India's 29 states, at least those states should approve it sooner than later. Others are uncertain. Mamata Banerjee, for instance, has refused to implement Modicare in West Bengal.

The biggest hurdle at the state level will be in implementation on the ground. Even though health is a state subject under the Constitution of India, the Centre also spends on centrally-sponsored healthcare schemes such as National Health Mission, Rashtriya Swasthya Bima Yojana (RSBY). AB-NHPM will subsume RSBY.

Also, the priorities at the state level aren't exactly in sync with the Centre's own priorities. The big challenge will be in integrating the Centre's scheme with the state's existing schemes. Many states have their own healthcare plans in operation where the disconnect is: who is the target group?

While the Centre has initially proposed covering only the 'deprived' beneficiaries (as per the Socio Economic Caste Census of 2011/12), many state schemes cover a wider range of beneficiaries. Some even cover the entire state population. Karnataka's health insurance scheme, for instance, covers every state resident. Gujarat and Rajasthan-both BJP-run states-also already cover a wider range of beneficiaries.

While the Central scheme provides a Rs 5 lakh cover to a family of five, the states typically have a Rs 1 lakh cover.

There are other major differences too. The Central Cabinet has approved 1,366 health packages that will be covered under secondary and tertiary care under AB-NHPM. Rajasthan, for instance, covers over 1400. Most other states cover between 1000 and 1200 illnesses.

Also, while the Centre provides insurance cover only for secondary and tertiary care, states at times provide cover even for primary care.

Centre and states may agree to continue with two parallel schemes. However, that would be a colossal waste of public money. It would be untenable for states to continue with their own schemes even as the Central scheme would require them to pay at least 40 per cent of the cost availed by state residents.

Especially, when the objective of merging the Central and state schemes should be to lower the cost of delivery, not raise it. Use of technology, cross-subsidisation and higher volumes through risk pooling are meant to lower the cost of providing insurance coverage substantially.

In case the schemes are to be merged, it would be politically unacceptable if the states discontinue insurance to sections of society or for certain illnesses that had been previously covered.

Also, let's not forget the massive infrastructural challenge of implementing the scheme for 10 crore families. Neither the Centre nor the states have the requisite infrastructure for effective implementation. It requires participation by the private sector. For that, the private sector must see financial viability in dealing with the government.

That's still to be proven and will take time to settle down. Even the insurance cover will need to be bid out for insurance companies to participate. That process itself will go through a significant period to settle down.

Hence, while the RSBY may have received a resounding 'Yes' from the Centre, the tussle between the Centre and the states is only now set to begin.